Aggressive Tax Collection Nets State $86 Million

Connecticut took measures to boost tax collections that netted $86 million in the recent fiscal year.

HARTFORD — An initiative targeting the state's so-called tax gap produced $86 million in the fiscal year that ended June 30, the Department of Revenue Services announced Monday.

Each year, Connecticut misses out on tax revenue from misreported income and sales. For the 2015 fiscal year, the state launched an initiative to minimize the tax gap, the difference between what it should have collected and what it did collect.

The budget for the year assumed the move would collect an added $75 million.

"The resulting improvements are now built into our collections going forward," Commissioner Kevin Sullivan said in a written statement, adding that the number might rise before the books close on the fiscal year later this summer.

Part of the additional revenue came from the department's Corporation Business Tax Resolution Initiative, which sought to resolve tax disputes with corporations operating in the state in exchange for greater clarity on future tax liabilities.

That part of the initiative, which generated $31.6 million, was largely related to companies trying to "minimize their taxes by allocating income to states with lower taxes than Connecticut," Sullivan said in an interview.

The remaining gain came from limiting tax permit renewals for companies owing back taxes; comparing reported sales with new data provided by the IRS on credit card sales; and stronger enforcement of sales and withholding tax delinquencies.